Taxpayers could lose billions as Ifmis and county manual records do not tally – report

Tuesday November 14 2017

Edward Ouko.

Auditor-General Edward Ouko speaks at a meeting on November 14, 2017. Audit reports indicate that taxpayers risk losing billions of shillings in the counties due to discrepancies recorded between the Ifmis and statements of their financial transactions. PHOTO | FRANCIS NDERITU | NATION MEDIA GROUP 

By DAVID MWERE
More by this Author

Taxpayers risk losing billions of shillings in the counties due to the huge variations recorded between the Integrated Financial Management and Information System (Ifmis) and statements of their financial transactions.

In the 2016 county audit reports, Auditor-General Edward Ouko noted that the inconsistencies in majority of the 47 county governments' records made it difficult to confirm the accuracy and completeness of the expenditures.

VERIFICATION

“Documents were not presented for audit verification contrary to the law,” Mr Ouko said in the reports tabled in the Senate.

The Public Procurement and Disposal Act requires the county accounting officer to maintain a filing system with clear links between procurement and expenditure files to facilitate an audit trail.

Government institutions are required to carry out manual transactions and update the Ifmis accordingly, but this has not been the case as expenditures in the counties have always been done manually under the guise that the “system is slow or not working.”

For instance, the Lamu County Government had discrepancies amounting to Sh5 billion in financial statements and Ifmis.

STATEMENTS

The county also failed to prepare Ifmis bank reconciliation statements.

“The management did not prepare bank reconciliation statements for all the bank accounts under the Ifmis system as required by the National Treasury and the Public Sector Accounting Standards Board,” the auditor said of Lamu County Government.

“Instead, bank reconciliations were prepared from balances recorded in the manual cash books, which did not capture all the payment transactions in both recurrent and development vote.”

Baringo, Kajiado, Nandi, Narok, Siaya and Tharaka-Nithi counties were also cited among those that recorded discrepancies.

Mr Jerome Ochieng’, the director of Ifmis, said using the financial system should be made mandatory at the national and county level before any transaction is approved and made.

RECORDS

Currently, national and county government transactions, including salaries, various payments and procurement, are done and approved using the paper work before updating the Ifmis.

“I would not know under what circumstances they failed to capture in the Ifmis because from our end, we expect everything transacted in the system,” Mr Ochieng’ said.

The Kericho County Government was cited as one of the counties that kept two parallel systems – Ifmis and a manual system.

According to the county’s Ifmis vote book, the total outstanding commitments amounted to Sh121.2 million over the period under review with an unreconciled variance of Sh25.4 million.

This variance means that the accuracy and completeness of the financial statements cannot be confirmed, according to the auditor-general.

DEVOLVE IFMIS

Marakwet West MP Kangogo Bowen said the national government should devolve Ifmis servers to make it more effective.

He said it is not an online live system and it remains open to abuse by those who want to propagate corruption and other “improper accounting regimes.”

“During my time in the Public Accounts Committee of the National Assembly, we recommended that Ifmis be decentralised to the counties so that, as opposed to a centralised server at the Treasury, each county will have its own server,” Mr Bowen said.

The legislator explained that the servers at the counties will then be required to send information to the main server at the National Treasury on a monthly basis.

BACKLOG

He said that the backlog of approvals pending at the National Treasury is the reason why the system is slow, opening up to abuse of the manual system.  

In the county government of Elgeyo Marakwet, where Mr Kangogo comes from, the variance between Ifmis records and financial statements stood at Sh2.8 billion.

The variance was recorded in receipts, payments, cash and bank, receivables and payables.

Mr Kangogo said that the auditor-general should that will slash budgets of counties that abuse the financial system.